Senate Economics Legislation Committee, , 1:44:22 to 2:07:40
Treasury officials address housing supply targets and the redaction of modeling documents in FOI requests.
Topics: Infrastructure, Freedom of information, Parliamentary privilege
Speakers: Andrew Bragg, Ben Rimmer, Nicholas Dowie, Lisa Darmanin, Hon Tim Ayres, Hon Richard Colbeck
start. Um, oh, it's 10:44. People watching at home might get upset. >> No, >> no one's watching at home, are they? All right, it's 10 10:45 now. All right. Uh the committee welcomes senator the honorable Tims minif for industry and innovation and minister for science representing the treasurer. Uh minister would you like to make a short opening statement? >> No. Thank you. >> No. Uh before I introduce um our other witnesses, I would also note um that the on the program we are scheduled to break at 12:30, but we are going to break at 11:55 um to enable um us to go to the house for the government release of the 2025 closing the gap annual report and 2026 implementation plan. Just for anyone following at home, um the min so the committee also welcomes representatives from the department of treasury, housing group and housing Australia. Um would representatives from Housing Australia like to make an opening statement? >> No. Fabulous. So we will go straight to questions. Senator Bragg up first.
>> Thanks, Chair. I'll have some questions for the department first and then I'll ask questions to Housing Australia given that you're separate entities. Uh, okay. So, how's it going with the housing
>> Uh, Senator, there are a range of housing targets. There's the 1.2 million uh national housing according >> uh the the housing accord uh I think it's um widely known, Senator, that achieving the full 1.2 million will be challenging. I think the National Housing Supply uh and affordability council has described that target as uh ambitious but uh but suitable. Um there there are good signs of progress in the housing market at the moment. Approvals uh are doing very well. Uh construction activity is doing very well. Uh the cost of construction has come has come back a bit. uh the time to construct housing has come back a bit since the start of the accord uh process and the efforts of all jurisdictions uh the Commonwealth and also state and local and private industry I might say uh to improve housing supply. So uh there is good progress across a wide range of those fronts on the 1.2 million. There's also very good progress Senator against the government's 55,000 social and affordable
>> I didn't ask. So, let's just try and stay on task and try and have like crisp efficient answers. So, the 1.2 million, how many will be actually constructed of the 1.2
million? Uh, Senator, the the most recent forecast uh is the National Housing Supply and Affordability Council's forecast of nearly 12 months ago now, which said uh 938,000 dwellings uh uh during the [snorts] accord period.
>> So about 250,000 short
>> uh on those numbers which are 12 months old, nearly 12 months old. And as I've pointed out, Senator, there are recent uh improvements in housing market conditions that >> uh I think uh pointing in an optimistic direction.
>> Well, I mean, we said the RBA governor here. Were you able to hear any of her evidence?
>> I didn't hear her evidence.
>> So, the RBA is forecasting negative dwelling growth over the accord period. So, it will actually go negative by 2028.
>> Senator, I didn't hear the governor's evidence. So I'm I'm not going to offer a comment about that.
>> Fine. But um I think we can safely say that the targets won't be met. >> Uh which which is the which is the worst state so far?
>> That that's your assertion.
>> That's the evidence we just heard. We're a quarter million houses short. >> Well, that's 250,000 houses short. That's the evidence we just heard.
>> That's your assertion. That is not the evidence we just heard. That is fact. That is not the evidence we just heard. >> and carry on. of sense of anguish >> on your side of politics. I think you need hearing aids.
>> You need hearing aid.
>> The point of a target >> and and the contributions that institutions make along the way about making assessments about how the target is proceeding. It's a point of a target. It is it is designed to concentrate the mind and deliver the kind of national effort >> that is required uh to make a difference. Housing approvals uh increased >> every year over the last 3 years.
>> Yeah.
>> Uh construction costs have stabilized. >> Construction costs have stabilized. >> You built fewer houses. We are we there is there the the idea the the liberal model for this is
>> once he's polic I'll ask him some questions
>> do nothing uh and let private industry
>> this is good I'm happy to have
>> other people's achievements uh when the what happened uh when you're in government was precisely nothing
>> I mean precisely nothing I'm happy to have the situation where the minister can try and debase senate estimates with his political speeches but if he's going to do that I'm going to ask him questions Okay.
>> Well, well,
>> okay. Hang on. Let's Let's um try to >> Excuse me. Senator, you're going to
misrepresent evidence that's just been put to you.
>> He just said we're going to miss it by
just not that was not what the official
>> All right, let's stop arguing so we can get the information that um each person is trying to get out. So, let's try and um uh focus on Senator Bragg. If you want to ask your next Yeah, go ahead and ask questions if we one at a time. and then not talk over the top of each other, please. I think everybody will get a lot more out of it.
>> I understand. You're doing a good job, Chair. I don't want to >> antagonize you.
>> come on. Let's >> I'm not patronizing anyone. >> Everyone, >> Senator Bragg, off you go.
>> So, okay, we think we've dealt with that issue. So, we're quarter of a million houses behind on the national housing target. So, which states are doing the
the states that are doing well are Victoria, WA, and the ACT.
>> Yeah. Who's going bad?
>> Uh, the Northern Territory has some particular challenges that relate to their market conditions.
>> All right. What about New South Wales?
>> New South Wales and Queensland are not doing uh so well compared to the targets. I'm sure we can find a more accurate description than that uh based on the 2025 forecast. Uh for your benefit, Senator, all of these numbers will be updated in the 2026 state of the housing system report uh with reforcasts that reflect current market circumstances. uh and uh that will uh in the ordinary course of events that will be published in kind of April May this year.
>> So have you looked at the latest statement of monetary policy?
>> Uh I haven't looked at the precise statement of monetary policy Senator of course I've read summaries of it and um media reporting about it.
>> Okay. Would would you like me to ask you some questions about it in relation to your housing role or would you like to send another official to the table?
>> Senator, why don't you ask the questions and let's work out u where it's best to direct those questions.
>> Okay. Well, I'll get the numbers. I think I think that'll be more more so in the RBA's November 2025 statement of monetary policy, the bank was projecting dwelling investment growth of 4.8% 8% in December 25, 3.7% in June 26, 3.1% in December 26, 2.7% in June 27, and then 2.5% in December 27. So that was their projections in November last year. Now if you look at the statement of monetary policy from this February, uh they go from 5.5, 3.7, 1.8, 8 1.1 0.3 and then negative 0.4 by June 28. So that that I imagine would concern you as the chief commisar of housing at the Treasury that we're getting negative dwelling investment now projected by the central bank. So what do you say to that
>> Senator? What I would say to that is uh the the forecasts that are in the myo uh documentation and that are broadly reflected in the numbers that you've read out in the short term. >> Are for solid dwelling investment growth in the in the short term in particular in 2026 27. >> Uh that's uh that's a positive. Uh there are market conditions that are improving. There are a a wide range of government actions that are beginning to kick in both at the Commonwealth level uh and at state and territory government level. Uh all of which uh we're now starting to see flow through into positive signs in the housing market. I'm not going to second guess the governor on on monetary policy uh or economic forecasts. Senator, you wouldn't expect me to.
>> You sound relaxed. That's good. I'm glad
actually with getting a better outcome. But I wouldn't describe myself as relaxed. But uh but there is a lot of focus going on about trying to improve housing market conditions both for the benefit of first home buyers and also for the benefit of renters.
>> Okay. So let's go to the um let's go to the 5% deposit scheme So, who am I? Hello, Mr. Dowey.
>> Hello, Senator.
>> How are you?
>> Good, thank you.
now did you Were you the decision maker on an FOI in relation to modeling?
>> I was the decision maker in relation to
>> You were the decision maker. Well, do you know that we talked about you last night?
>> I did.
>> Well, it was all very positive. Nothing
mention me several times by name.
>> Well, we know that you're a very, you know, good official and we we're just trying to I mean, one of the benefits of having Senate estimates is it's a fantastic transparency organ because it allows us actually to unfortunately highlight that there are times when FOI system doesn't work as well as it could. Maybe there are mistakes made. We all make mistakes, myself included. Um and so it appears that in the FOI 40 65 which was in relation to the modeling which we discussed at length last time. So we now have a bit more information because last time we had this conversation I was asking you whether the modeling was on a piece of paper, how it was transmitted, all that sort of stuff. All those stupid questions that you probably found quite irritating. But now we know that it was on a piece of paper. It was sent in an email to um the director of policy at the office of the honorable Clare O'Neil and um there were a few numbers in there but obviously a lot of redactions a lot of redactions. So the official last night gave evidence that the legal branch advised you as the decision maker as to how you apply the FOI rules. Is that
right? So in in in coming to my decision under the FOI act, I I did I did um consult with the legal branch to make sure that I understood the the relevant provisions of the act sufficiently to make a decision.
>> Okay. And so you decid you're the decision maker. So you're accountable for making the section 22 exemption. >> Yes, Senator. So you decided that the FOI seeking access to the modeling uh on the 5% deposit scheme market impacts and everything else that you decided that point4 factoring in the supply response those details were
>> So um to give you some context Senator I believe you're referring to document one of the information pack that was uh that that was released to you. Um, so in relation to that document, I did apply the test of what was relevant to your request. And just for the for for the record, the request that you did make was for any and all correspondence, briefings, and other documents, including emails and messaging on mobile devices. That's right. >> Related to Treasury modeling regarding the market and housing price impacts caused by the government's expansion of the home guarantee scheme. And that particular document that you're referring to there, document one, um did contain information that was transmitted from Treasury to the housing minister's office um about some of the assumptions that that sat behind Treasury's modeling and that's the information that was disclosed to you.
but the FOI was about market and price impacts caused by the government's expansion of the scheme. You've blacked out factoring in the supply response saying it's irrelevant. So I just I find it hard to imagine given the context that we're working in when supply has collapsed under this government and that's one of the reasons that we have the significant price impacts because of the 5 cent scheme that you you thought it was okay to say that that section was irrelevant.
>> So just to be clear Senator what your FOI request was about Treasury modeling. So the information that was released to you was about information that was relevant to Treasury's modeling.
>> Senator, for the record, I believe this matter is also subject to an appeal to the OIC through the FOI process.
>> And as you know, that will take years and years and years and your strategy is to run the clock down so you don't have to give any documents to the Senate. >> I get that.
>> The Senate, I'm sorry, with respect, that's that's deeply offensive. That's calling into question the professionalism of public servants at the table. That's that's not
appropriate. You've blacked out stuff that is clearly not irrelevant.
>> So,
>> it's not the first time this has happened.
>> Senator, you you just made some assertions about the conduct and professionalism of public servants that with respect were not appropriate. The decision maker made a decision. That decision, I believe, is now being appealed uh or whatever the right language is through the OIC. uh that that is the normal process and an appropriate process to make sure that the decision maker made the correct decision and undoubtedly if Mr. Died uh that will become apparent to all.
>> There's no rule that says that we can't ask you about the way that you administer your department here at Senate Estimates. That's the whole point of it.
>> Yes. But it is a normal and reasonable proposition uh for the uh director general to advance that the that this is the subject of review. Uh it's a formal legal process. Uh and it's not appropriate to
>> why
>> uh prejudice
>> why is it not appropriate
>> that that process.
>> But why is it not appropriate?
>> Well, because you don't want to prejudice that process, do you?
>> I'm asking why.
>> Is that what this is really about?
There's not actually
>> trying to trying to distort uh uh the proper review process.
>> Just because there's a review, it doesn't mean that you can't ask questions about these materials.
>> Is that your intention?
>> I'm asking questions about these materials because they've been blacked out unnecessarily.
>> I think if I
>> They shouldn't have been blacked out.
verballing the committee, Minister. I >> it's okay for >> Senator Bragg to ask questions about the
decision. So I think
you're doing exactly what you're complaining about him doing to you.
>> Senator in terms of this issue I think um Senator Bragg has asked a range of questions. The department has responded in terms of the matters being under review. Um do you want to ask a follow-up about that or um and can we move on because I in terms of you know what other information you're going to be able to elicit? This was discussed last night as well. Um and similar responses were provided in terms of um a review elsewhere.
>> I mean th this is a pretty basic transparency thing that we're asking about, right? This is whatever your views are on this scheme. It's a significant market intervention. Some people think it's good, some people think it's bad. We're just trying to get an understanding of the modeling and the assumptions that were provided to the to justify this policy intervention. Not asking you to give away cabinet secrets or other things in our system which are not appropriate. I you know effectively your assertion is and I'm sure you've tried to do the right thing. I don't want to impugn any treasury official Mr. Rimmer. um you've used your department has used an exemption here to say that the supply response is irrelevant to the modeling underpinning the 5% deposit scheme. Now there's only two sides to the market. There's a supply side and then there's a demand side. So by saying the one whole side of the market is irrelevant to the question at hand, I think means that you've blocked out something as irrelevant that could never be irrelevant. So that's why I'm asking the question.
>> Sure. And Senator, you've made an assertion. That assertion will be tested through the OIRC process. The decision maker has made a decision in accordance with uh his legal obligations. Uh and the decision is as uh you have in front of you uh in in your hands uh based on a proper application of the FOI act, I'm sure. And if it's found to be an improper application of the FOI act then that will that will u all become uh part of the record in due course.
>> So just so I understand so the evidence you're giving is that you judged it to be irrelevant because the scope of the FOI in your judgment was not relevant to the supply response.
just to be clear, in relation to that um, section four of that document one, there was information that was released about um, Treasury's view on the supply uh, response of this scheme.
>> It was blacked out.
>> No, there was also some dot points under that that were released. In terms of the entirety of that section, some of the material there that has been redacted because it didn't relate to um to the views on treasuries modeling, which is what your request related to. Well, what
did you assume the supply response is
So um in terms of the supply response that we assume for the purposes of this modeling yeah our modeling is based on the work by um Saunders and Chulip which um effectively has the has the assumptions that um that um supply over time increases when when prices increase and so there's more incentive for the market to to increase supply in in in movement with market prices.
>> So come back to you minutes. >> Did you have uh dwelling completions number in mind for the year or for the
I'm not sure we have that those specific numbers with us at the table, Senator.
>> Well, I think isn't the official looking for a piece of paper?
>> But I'm not that.
>> You don't. Okay. So, but there would have been some numbers. You just don't have them with with you.
>> So, in terms of Yeah. of the modeling that we that we would have done. We've used our modeling and we've made some assumptions there in terms of the amount of the amount of people who would um take up the scheme and we've made some assumptions there based on that about what that would do to prices.
But just to be be clear, you did assume that there would be a certain number of dwellings completed over the period of
>> Well, what we assumed is that um that there would be a shock to the model. We've applied that shock in terms of the of the additional demand that uh this score that this scheme would would would generate. Um and as a result of that we've um uh the model has given us some some assumptions around what the prices um are likely to be um over time. Um and the model itself just has some some assumptions based in it around around what the supply does in relation to
>> Okay. The supply data would have come from the treasury or the RBA. Oh, well
the supply data itself as say it's how the how the modeling itself um um works which is um that uh we're assuming that that that any price increases would have would have there be a supply response in a um in response to that.
>> Senator, if if I can help the the model produces a marginal change to the to the supply outcomes and the price outcomes. Uh it doesn't uh it doesn't predict a future price or a future number of completions. uh which I think is where your question was heading.
>> It doesn't have any numbers.
>> That's not what I said. Senator,
>> what did you say?
>> I said the model predicts a the marginal impact of different policy settings, not the absolute impact uh of all policy settings and all other variables in the housing market.
>> But it's not an abstract. I mean, you're putting something into the market.
>> Sure. But but Senator, as you know, there are many other variables that are going on in the housing market from day to day, including the RBA's um monetary policy stance, um real growth in incomes uh and and other factors.
>> Let's stick with our favorite FOI. FOI >> 4065. Yep.
>> I'm going to have to rotate the call. You've had more than 20 minutes, but I will come back to you. Okay. Understand? >> Thank you, uh Senator PCO.